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Published: 16/05/2024
The Office for National Statistics (ONS) publishes monthly updates on average weekly earnings across the whole economy and by industry and sector. This commentary relates to ONS’s EARN02 and EARN03 datasets, which cover non-seasonally adjusted earnings, excluding bonuses and including arrears.
Annual growth in construction pay still lower than other sectors
Construction wages, as measured by ONS’s Average Weekly Earnings dataset, increased by 1.9% in the year to March 2024. This was a fall on the increase of 3.6% in the 12 months to February 2024. On the month, earnings were up by 0.3%.
Across the whole economy, the average increase in wages in the year to March 2024 was 5.9%, which was a 0.6% increase compared with February 2024.
The construction index of non-seasonally adjusted earnings (K5AH) has been lower than the whole economy index (KA5H) since April 2020. While annual growth in earnings has been lower in construction than the whole economy average each month since April 2023.
Source: ONS – Construction (K5AH) and Whole economy (KA5H), non-seasonally adjusted average weekly earnings, excluding bonuses, including arrears
Comparing pay at a sector level (with index K56S), construction workers saw the lowest annual increase in average earnings across all sectors, at 1.8%. All other sectors were up by over 5% in the same period.
Source: ONS – EARN02: Non-seasonally adjusted Average Weekly Earnings, excluding bonuses, including arrears, at sector level
The ONS data shows that the construction sector has experienced the most extreme fluctuations in earnings movement in recent years, from a 9.5% annual decrease in May 2020 to a 13.5% increase in May 2021.
Source: ONS – EARN02: Non-seasonally adjusted Average Weekly Earnings, excluding bonuses, including arrears, at sector level
Dr David Crosthwaite, Chief Economist at BCIS, said: ‘Earnings growth in construction is currently significantly lower than the other sectors of the economy. With reduced demand, primarily due to continuing high borrowing costs, and output falling, there has been downward pressure on wages.
‘This is unlikely to be sustainable and, once demand recovers, we expect stronger wage growth to return when capacity constraints become apparent. We’re forecasting annual growth in the BCIS Labour Cost Index to be 8.1% in 2Q2024.’
BCIS produces five-year forecasts of the Average Weekly Earnings construction (K5AH) and whole economy (KA5H) time series for subscribers of BCIS OpX.
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